March 10, 2015

THE MALTHUSIAN IS PERIODICALLY RIGHT IN THE SHORT TERM...:

Gold's Long Decline Is the Real Story (Barry Ritholtz, 3/10/15, Bloomberg View)

 In February, gold slipped about $60 and the fall continued this month. Gold now is down about 1.6 percent year-to-date and it wouldn't be a surprise if the precious metal fell more this month.  "March has a history of being the worst" month for gold, according to Bloomberg. During the past four decades, on average, bullion futures decline 1 percent in March. "Prices fell 65 percent of the time, more than any other month."

The reasons gold prices can't seem to gain any traction are many: Job creation has been robust, inflation is low and the Federal Reserve is widely expected to begin the process of easing back on monetary accommodation -- strengthening the dollar and further reducing gold's appeal.  

As we noted late last year, the gold narrative has failed. The promised hyperinflation that was supposed to send gold soaring never arrived. Instead, we had disinflation, with a threat of global deflation. 


...but always wrong in the long term.

Posted by at March 10, 2015 2:58 PM
  

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